You’ve had some time to frame those photos of your children in their cap and gown on that proud day they graduated. Now reality sinks in. There’s going to be off on their own. Are they ready?

by Alicia Wanek

If your child has finished college and they’re headed out into the real world – getting their own apartment, starting their first “real” job, and (gasp) handling their own finances, it can be a scary prospect for both of you. You hope you’ve prepared them as best you can. If your child has just finished high school and they’re moving off to the dorms you still probably have some control over how they’re handling their money. This is the time to make sure they know the value of a dollar.  But how?

Chuck Cowell, Dallas Market Chairman, Guaranty Bank & Trust encourages you to work with your child to establish a personal budget. Start as teenagers if you can and continue to evaluate as they move on to college. “Even if all they have is an allowance, let them plan for their weekly/monthly outings and expenses and make sure they plan ahead for the non-standard events they wish to attend,” Chuck says. More importantly, he believes, is that “… when the money is gone… it’s gone.  Missing a concert/party/trip due to their inability to properly manage ‘their’ budget is a powerful learning tool for future life situations.”

Bryan Camper, certified financial planner with Camper Rogers, agrees, but believes first kids may need help identifying wants vs. needs. As an adult, they need to know, for example to pay the rent first. He recommends breaking down what their expenses will be, and let them know that “If you take care of your responsibilities, we’ll help you with your wants.” That way, they begin to understand that money is “earned” not just “given.”

Here are a few more suggestions they offer to help your child on the path to financial independence:

Slowly let your children handle more of their money themselves.  It might just start with letting them make some of their own decisions about how to spend the funds they have.  It could be giving them a budget at the beginning of the school year for new clothes. Your child could opt for a few designer duds or a closet full of clothes from the resale shop, but you have to hold fast to the amount they’re given.

Let them open their own checking account early, but have access to their on-line banking or you can be on the account, too. As they move through college, you can start to identify the problem areas, monitor patterns, and catch warning signs early.  For example, if you notice a lot of ATM cash withdrawals, you probably need to have a talk with your child about what that cash is being used for.

“Give them a firm budget,” Bryan warns. A student with unlimited funds, free time, and newly-gained independence could be a recipe for a disaster.  He recommends giving them a hard and firm budget with a set amount of money at the beginning of each month. That way they are less likely to get into trouble.

Share with them some of your successes and poor decisions. Chuck recommends sharing your finances with older kids “to the extent that it will help them understand that everyone has a limited amount of resources and everyone must make choices as to how and when they are expended.”  Bryan says, “Give them some specific examples of your good financial decisions, and, more importantly, your mistakes.” Hopefully they can avoid making the same ones themselves.

Have them make their own money before they graduate from college, at least a summer job. Bryan recommends this as the best way for them to learn where money comes from. When it’s their own money they earned, they are likely to spend it differently and appreciate it more.

You can bail them out – once or twice. Bryans says, “They will blow it from time to time – it’s practically inevitable.  Chuck encourages you to let them “feel some pain” though. If they “think that mom and dad are always the deep pockets, the whole budgeting/planning stuff just becomes ‘stuff.’” Bryan encourages you to make sure they understand there isn’t a limitless supply. Let them learn from the mistakes and see there are consequences, even if that means letting the yard guy off for the summer and having your child work for you to pay you back. There’s no such thing as “no strings attached.”

Bryan recommends all parents buy The Complete Guide to Personal Finance: For Teens and College Students by Tamsen Butler (available on iBooks or Amazon). Then get their children to actually read it.  In the end, Chuck says, “All you can do is plan, pray, and adjust!”